I still had 18 months before my 7/1 ARM adjusted from its current 5 percent annual rate, but with rates as low as 4.75 percent for a 30 year fixed mortgage, there wasn’t a lot of downside pressure … yet there was a lot of upside risk.
Who can really say if mortgage rates will stay as low as they are currently? I certainly didn’t want to be kicking myself in a year or so should rates escalate to who knows where. That’s a “roll of the dice” I’m not willing to make on my financial future … so I just refinanced my home.
I got a lot of quotes from and also some through Mortgage Search 123. Both had some unbelievably good rates but in the end I went with a local lender and got that 4.75 percent rate with low closing costs … and NO appraisal fee. Not having to get an appraisal saved me over $400.
How did I get such a great mortgage interest rate?
One answer: a great credit score. Currently my score is just shy of 800 which is considerably better than the 668 I had just a few years back. I was able to pull my score up by taking a few proactive steps. 1. I became a vigorous defender of my credit report. I obtained copies from all three credit reporting agencies and challenged any and every entry that didn’t match my records. It took a few months (around 6 actually), but I was able to get many small errors corrected by writing certified letters challenging those inaccuracies and in the end, it made a big difference. You can get a FREE copy of your credit report at www.annualcreditreport.com. Note that it’s ANNUAL credit report dot com. That one really IS free. 2. I paid all my bills on time. All of them. One hundred percent of the time, on time. If that meant no tickets to the big game, so be it. If it meant no dining out for a few weeks, bring on the rice and beans. If it meant driving back home late at night rather than staying in a hotel, pour me some coffee. Paying my bills on time was just an extension of defending my credit. 3. I stopped chasing rates on credit cards and mortgages. By applying for a new credit card every couple of months as well as refinancing my home every year or so, I was crashing my credit without realizing it. Once I found out that multiple credit inquiries were negatively affecting my score, I stopped, and my score climbed. Stick with one rewards card and get your best mortgage rate, then stop applying.
Three simple steps improved my credit score
The funny thing is, they were all within my power. Each one of them depended on my determination, drive, and desire to make a positive change and with the help of my wife, we were able to refinance our home, save several hundred dollars per month, and get rid of our private mortgage insurance.
Should YOU refinance?
That’s hard to say. I refinanced because of two reasons: an impending adjustment to the rate of my current mortgage and my personal fear that rates will be much higher in the future. Take a look at your break even point and see if it makes sense in your personal situation. If it does, be sure and use LendingTree or Mortgage Search 123 to help you find the perfect mortgage for you.
Photo by woodleywonderworks